This paper aims to examine how governance shapes the allocation and effectiveness of public resources in influencing health outcomes in Sub-Saharan Africa. It seeks to explain why similar levels of public spending produce divergent outcomes by focusing on the role of fiscal allocation and institutional conditions.
The study develops a two-layer structural framework in which governance, foreign aid and macroeconomic factors jointly determine public health expenditure, while health outcomes – infant mortality, under-five mortality and life expectancy – are produced through the interaction of health and education spending, foreign aid, epidemiological conditions and institutional quality. Using panel data for 43 countries over 25 years, the model is estimated using two-stage least squares to address endogeneity and capture interdependencies between fiscal allocation and outcomes.
The results show that public health expenditure is endogenously determined and that increases in spending alone do not translate into improved outcomes. Instead, outcomes are systematically shaped by sectoral allocation and governance conditions. Education expenditure exerts strong complementary effects, while foreign aid operates primarily through domestic fiscal structures rather than independently.
The findings highlight the importance of strengthening governance in budget allocation and execution, and of prioritising coordinated investments across health and education sectors to improve population health outcomes.
The paper contributes by modelling public health expenditure as an endogenous outcome of governance and fiscal conditions, and by conceptualising governance as both an upstream determinant of fiscal allocation and a downstream moderator of expenditure effectiveness within a unified framework linking fiscal allocation to health outcomes.
